DIR fees are one of the hottest and most sensitive topics today for independent pharmacy owners. These fees are often a source of confusion and frustration, and lead pharmacy owners to ask what can be done about them.

Understanding DIR

DIR is a fee system originally created by CMS (Centers for Medicare and Medicaid Services) and subsequently adopted by Medicare Plan Sponsors, designed to lower costs and improve outcomes for patients. CMS provides a lengthy explanation for Direct and Indirect Remuneration (DIR) fees. The short version: discounts to pharmacy reimbursement not captured at the point of sale.

DIR “fees” describe a number of different types of fees or charges collected from pharmacies participating in Medicare Part D. DIR fees are collected from pharmacies at varying times throughout the year, making anticipating and planning for them critically important for independent pharmacies.

DIR fees ARE:

DIR fees are NOT:

Regulated by CMS

Assessed post-adjudication

One part of reimbursement

Typically used to lower cost and/or improve patients’ health outcomes

Applied at the point of sale

Exclusive to any one PSAO

Retained by a PSAO

Exclusive to preferred networks

While independent pharmacy owners are less than thrilled with DIR fees, these fees are here to stay for the foreseeable future, or until such time that CMS changes their guidance. Therefore, it makes sense to understand how to prepare for them, manage them, and reduce them—and know about tools and resources to help.

Preparing for DIR fees and calculating DIR accruals

Steps for preparing include:

Step 1: Determine BIN/PCN

Resources to use are PSAOs, PBMs, health plans, and CMS.

Step 2: Gather information

Run reports from your pharmacy system with data including ingredient costs and claim counts.

Step 3: Estimate DIR fees

This can be done manually, but DIR calculators can simplify and automate this process. (See below)

Step 4: Accrue funds

Set aside funds each month so money is available when DIR fees are collected.

TOOL: Two tools to help estimate DIR fees are the McKesson AccessHealth DIR Estimator Tool and the myHealthMartSM DIR Estimator tool. Each tool allows a pharmacy to enter its own specific information and estimate accrual and incentive amounts, that may impact DIR payments, in order to plan accordingly.

DIR criteria varies

To understand how DIR criteria varies by plan sponsor:

Ensure you know what each plan requires in order to minimize DIR fees, which ultimately maximizes reimbursement.

Some plans measure at the individual pharmacy level; others measure at the PSAO/network level.

If you are directly contracted with a PBM or plan that has a DIR, refer to your contract for specific details.

A plan may have one or more common clinical and operational criteria including gap in care (statin), HTN (RAS) adherence, cholesterol adherence, diabetes adherence, high-risk medication, CMR completion rate, formulary compliance, generic dispensing rate, and percent of 90-day fills.

“Make sure you understand the measurement criteria for the plans that are most important to your business. The higher the performance, the lower the DIR amount, and ultimately the higher your overall reimbursement.”—Valerie Fortin, Senior Director, PBM Relations, McKesson AccessHealth, speaking to pharmacists at McKesson ideaShare 2017

TOOL: EQuIPP is a performance management system platform that makes unbiased, benchmarked performance data available to both health plans and community pharmacies. Pharmacies can use EQuIPP to understand current levels of performance and where to improve performance.

Conclusion

DIR fees may be here to stay, but the key to lowering them is strong clinical performance. Tools exist to help estimate and manage these fees, and several tools can help pharmacy owners improve performance and minimize DIRs.

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Health Mart is proud to be a member of the McKesson family, sharing in the collective industry knowledge and experience residing within all of the McKesson corporate affiliates. Since 1833, McKesson has been committed to the success of independent pharmacies through the delivery of innovative programs and reliable distribution services.